Bloomberg previously reported that Swiss authorities are considering partial or full nationalization of the country’s second-largest bank. Switzerland should have resorted to this extreme solution in the event that the merger with rival UBS could not be negotiated. As part of the deal, the Swiss central bank will also provide $100 billion to boost Credit Suisse’s liquidity.
UBS was, according to earlier information from the paper The Financial Times willing to pay a maximum of one billion dollars for Credit Suisse, which the financial institution refused to accede to. UBS will still acquire its competitor at a significant discount, according to the end of trading on the stock exchange on Friday, Credit Suisse is worth 7.4 billion francs, i.e. eight billion dollars.
The rescue of the institution was also complicated by the bank employees’ union. On Sunday morning, he called for the immediate establishment of a working group to help colleagues who are likely to lose their jobs. According to some sources, the takeover of Credit Suisse by UBS may threaten up to ten thousand jobs.
Credit Suisse is struggling to recover from a series of scandals that have undermined investor and client confidence. The outflow of client finances in the fourth quarter increased to more than 110 billion Swiss francs, almost 2.7 trillion crowns.
“Already after Credit Suisse’s results for last year, which were released on February 9, some analysts warned that there was a real risk of further capital raising in the future due to the ongoing losses generated, the outflow of client assets and the number of lawsuits the bank is facing,” said this week for E15 J&T bank analyst Milan Lávička.
Since the beginning of the so-called banking crisis, i.e. in the last ten days, the shareholders of Credit Suisse have lost exactly one hundred billion crowns, or a third of the value of their investments. On Friday alone, the entire European banking sector wrote off another three percent.
Credit Suisse’s long-term problems are escalating at a time when some banks in the United States have also run into trouble. Credit Suisse is one of the largest asset managers in the world, which is why the proceedings in Switzerland are closely watched by regulatory authorities in Great Britain, Germany, the USA and other large countries.
Analysts emphasize, however, that there is no reason for a widespread crisis. “There can be no question of a widespread problem. Certainly not to the extent it occurred in 2008 and 2009,” claims Trinity Bank economist Lukáš Kovanda.